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Navigate Global Payments – Markets Today 20th June 2022

 

MARKET WRAP – 20th May 2022

 

  • The S&P 500 rose 0.22% and finished at 3,674.84, followed closely by the heavy-tech Nasdaq Composite, jumping 1.43% at 10,798.35. At the bottom of the pile is the Dow Jones Industrial Average, which slipped 0.13%, sitting at 29,888.78.

 

  • The Australian dollar prepares to finish the week with losses of almost 1.60%.
  • AUD/USD plummets from weekly highs reached on Thursday around 0.7069, down below the 0.7000 mark, after Wednesday’s afternoon Federal Reserve rate hike, which initially lifted the major to fresh weekly highs above 0.7000. However, Friday’s overall US Dollar strength brought the pair down. At 0.6930, the AUD/USD is down 1.58% and will finish the week with losses close to 1.58%.

 

  • In the meantime, the US Dollar Index rose after falling from a fresh 20-year high and sits around 104.650, up by 0.82%. US Treasury yields remain elevated but tumbled. The US 10-year note yields 3.231%, down seven basis points.

 

  • To recap, rates were lifted 75 bp vs the 50 bp flagged for June (and July) prior to hotter than forecast US CPI data that upped the ante and consensus in the absence of official commentary, while dots were plotted at a steeper gradient, though not as inclined as some anticipated. In the subsequent press conference, Chair Powell doused a few more flames by describing the % point move as uncommon and adding that next month’s hike could be 50 bp or the same magnitude, depending on the ongoing evolution of inflation.

 

  • The Fed blackout period is now over, with Bullard (2022 voter) the first to break silence saying the Fed has its credibility in check, although Kashkari (2023 voter) later gave more substance saying ‘ he would be in favour likely of 75bps in July, but called a 50bps strategy from there as more prudent’

 

  • Chair Powell spoke at a conference but gave said little of note, while George (2022 voter) explained her dissent for just a 50bps hike this week was based off her previously expressed over inverting the yield curve and not to be seen as making rash decisions.

 

  • In short, the Bank Of Japan maintained all of its ultra-easy settings and will continue JGB buying operations designed to defend the 10 year yield target with the additional offer to purchase CTD paper for an extended amount of time from June 20 (next Monday).  Conversely, the Swiss National Bank caught almost everyone out by raising rates 50bp and the reaction was reminiscent of January 2015 when the Eur/Chf peg was pulled, as the Bank also indicated a willingness to tighten further if necessary and President Jordan said the Franc is no longer deemed to be highly valued.

 

KEY RISK EVENTS Monday & Tuesday

Monday – US Public Holiday.

Tuesday

  • RBA Minutes The RBA will release minutes from the June meeting where the central bank hiked rates by 50bps to 0.85% (exp. 25bps increase) and noted that inflation in Australia has increased significantly, while it reiterated its commitment to doing what is necessary to ensure that inflation returns to the target over time.
  • The RBA also stated that inflation is likely to be higher than expected a month ago and that the Board expects to take further steps in normalising monetary conditions over the months ahead, with the size and timing of future interest rate increases to be guided by incoming data and the assessment of the outlook for inflation and the labour market. Furthermore, it noted that the Australian economy is resilient, although one source of uncertainty about the outlook is how household spending evolves, given the increasing pressure on finances from higher inflation
  • UK CPI Investec forecast headline CPI to remain at 9% and the core to slip to 6% from 6 .2% in April. But analysts expect a combination of former food costs, higher petrol prices and another s harp jump in the energy price cap in October to push inflation into double figures over the coming months. This time around, analysts at Investec (forecast an unchanged headline rate of 9%) suggest that food and energy will likely continue to place upward pressure on prices. However, this could be moderated this time around by clothing and footwear given the surge seen in May’21.

Source FX Street

        US Federal Reserve Dot Plot

Soruce Bloomberg

Currency ranges over Friday  

 

Currency Pair Low High
AUD/USD 0.68975 0.7051
EUR/USD 1.0445 1.056
GBP/USD 1.2174 1.2357
USD/JPY 132.165 135.42
NZD/USD 0.62695 0.6368
USD/CAD 1.2942 1.3079
USD/CNH 6.6946 6.7256
AUD/JPY 92.98 94.56
AUD/NZD 1.0989 1.1089
DXY 103.833 105.085

 

Stocks/Commodities at NY close Saturday

 

Equity Index Daily % Change Closing Level
ASX -1.8% 6475
SHANGHAI COMP 1.0% 3317
NIKKEI -1.8% 25963
FTSE -0.4% 7016
DAX 0.7% 13126
CAC -0.1% 5883
DOW JONES -0.1% 29889
S&P 500 0.2% 3675
NASDAQ 1.4% 10798
VIX -5.5% 31.13
Commodity Daily % Change Closing Level  
CRUDE OIL -6.8% 109.6  
ICE NAT GAS -13.6% 201.8  
GOLD -1.0% 1839.4  
SILVER -1.3% 21.7  
SGX IRON ORE -0.5% 119.4  
CMX COPPER -2.4% 403.0  
ICE SUGAR 0.3% 18.7  
ICE COTTON -0.8% 201.8  
CBT WHEAT -4.0% 1046.8  
BITCOIN -1.0% 20409.3  
 

 

Rates Markets Yield Daily Change
US 2 YEAR 3.18% 8.6
US 10 YEAR 3.23% 3.0
AUST 2 YEAR 3.31% 0.0
AUST 10 YEAR 4.13% 0.0

 

 Source Bloomberg

 

   

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Disclaimer: This material is provided by Navigate Global Payments (Navigate) ACN 615 699 888, AFSL 502711. The material contains general commentary only and does not constitute investment or any other advice. Certain types of transactions, like futures, options and high yield securities can be risky, and not suitable for all investors. This information has been prepared without considering your objectives, financial situation or needs. Please seek your own independent legal or financial advice before proceeding with any investment decision. The information is believed to be accurate at the time of compilation and is provided in good faith. Navigate does not warrant the accuracy or completeness of any information contributed by a third party. The information is subject to change without notice and Navigate is under no obligation to update the information. The information contained in this material are opinions of the author at the time of writing and does not constitute an offer, recommendation to act, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter a legally binding contract. This information, including any assumptions and conclusions is not intended to be a comprehensive statement of relevant practise or law that is often complex and can change. Past performance is not a reliable indicator of future performance. Any forecasts given in this material are predictive in character.

 

 

 

 

Disclaimer:This material is provided by Navigate Global Payments (Navigate) ACN 615 699 888, AFSL 502711.  The material contains general commentary only and does not constitute investment or any other advice.  Certain types of transactions, like futures, options and high yield securities can be risky, and not suitable for all investors.  This information has been prepared without considering your objectives, financial situation or needs.  Please seek your own independent legal or financial advice before proceeding with any investment decision. The information is believed to be accurate at the time of compilation and is provided in good faith.  Navigate does not warrant the accuracy or completeness of any information contributed by a third party. The information is subject to change without notice and Navigate is under no obligation to update the information. The information contained in this material are opinions of the author at the time of writing and does not constitute an offer, recommendation to act, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter a legally binding contract.  This information, including any assumptions and conclusions is not intended to be a comprehensive statement of relevant practise or law that is often complex and can change.  Past performance is not a reliable indicator of future performance. Any forecasts given in this material are predictive in character.

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